Sept. 21 (Bloomberg) -- Textron Inc. plans to cut 700 jobs
at its Cessna plane division, representing about 8.3 percent of
the unit’s workforce, as the aircraft maker reduces production
further because demand hasn’t yet picked up after the recession.

Manufacturing free cash flow from continuing operations
this year will fall to about $400 million, from a previous
target of as much as $550 million, because of lower jet
deliveries, the Providence, Rhode Island-based company said
today in a statement. Profit, excluding some costs, will still
be 55 cents to 65 cents a share this year, Textron said.

Orders for business jets haven’t improved along with the
economy, Chief Executive Officer Scott Donnelly said in the
statement. He predicted in May that Cessna’s results would
bottom out this year as corporate earnings rebound. Cessna,
which has cut half its workforce since 2008 to about 8,400,
declined today to detail the reduced output levels.

“Meaningful recovery in bizjet production may not happen
until 2012,” Robert Stallard, an analyst with RBC Capital
Markets in New York who rates the shares “outperform,” wrote
today in an investor note. “We think it is better to take
action now versus oversupplying the market in the long run.”

Finance Unit

The lower cash from manufacturing operations will be more
than offset by a higher liquidation rate at Textron’s finance
unit, which is shrinking its portfolio, the company said.
Receivables will be reduced by $2.4 billion this year, up from
the previous target of $2 billion, Textron said.

The company said it repaid the $665 million balance
remaining on its $1.25 billion bank line in the third quarter,
which should allow net debt to drop below $5.5 billion by year-end as planned.

Textron gained 10 cents to $20.29 at 4:15 p.m. in New York
Stock Exchange composite trading. The shares have risen 7.9
percent this year.

“While we are seeing solid performance in most of our other
businesses, we have not yet seen a discernible improvement in
business-jet order activity,” Donnelly said in the statement.
“Therefore, we are taking further production and restructuring
actions at Cessna.”

Cessna’s largest facility is in Wichita, Kansas, where it
employs about 6,500 to build and maintain business jets and
Caravan turboprop aircraft, followed by plants in Independence,
Kansas, and Columbus, Georgia. The cuts will take place in
multiple locations and will include both management and workers,
Karen Gordon Quintal, a spokeswoman, said in an e-mail.

The announcement comes three days after assembly workers and
mechanics in Wichita rejected a contract that would reduce
health-care costs for the company and increase expenses for
employees. The seven-year deal was ratified by default, because
there weren’t enough votes for a strike.

In July, Cessna told investors that it reduced the 2010
delivery forecast for its Mustang aircraft, one model of its
business jets, to about 70 units from an earlier projection of
105 planes. During the call, the company didn’t update its
previous delivery forecast of 120 light-to-midsize jets.